EU Bans Payments From Non Custodial Wallets!

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tobetada13.4 Klast yearPeakD3 min read

The EU is now a de facto surveillance state

Not like that should be any real surprise, but the speed at which they have pushed these laws through in the last years and the lack of opposition paints a very bleak picture. Last year I covered the MiCA legislation coming into effect in around 2025. It's a post worth checking out if you are not familiar with the basics. Here is a quick summary of the goals:

(1) Establishing a general regulatory framework for crypto currencies/asssets (MiCA)
(2) Making all crypto transactions traceable (ToF)
(3) making it mandatory for CEXs to inform tax authorities of crypto transactions

All of this legislation is aimed at controlling and regulating CeFI. The big caveat in this legislation therefore is DeFi and as I pointed out the only logical conclusion and option they would have is to ban it.

In the documents on can read that the legislature will only encompass Centralized Finance (CeFi) and not Decentralized Finance (DeFi). While they do not straight out admit that they have no idea how to control DeFi, they rather word it as that the necessary regulatory framework still has to be worked out. Good luck with that! It is clear that the only way to deal with DeFi from a regulatory approach is to ban it as there is no other way to handle something that at its core cannot be controlled (after all, the user owns the keys to the wallet; and if it is an actual decentralized chain no actor can simply freeze funds!).

Well, now we officially have that confirmation.

EU Implements New AML Laws, Bans Anonymous Crypto Wallets

Although the headline seems to be erroneous: they cannot enforce the ban on non custodial wallets, but they can make payments coming from these wallets illegal. While that is a logical consequence when thinking about "curbing money laundering" (which is, however, just an excuse for total surveillance of the citizens), it will de facto stifle any crypto innovation and development and is an utter blow to financial freedoms. They are in fact gone with this legislation (since cash usage will also be severely limited). Non custodial wallets will be pretty much useless in the EU, unless you want to simply use them for storing your assets; but it's not unthinkable that they would just simply ban them as well and thereby making transfers from these wallets illegal (have fun trying to use your crypto funds!).

The fact that we are now already at this stage without any opposition paints a very bleak picture imo. People in general do not want to take back their freedoms as they do not even understand that they are losing them (or lost them). Like always, people become complacent and compliant until it is too late.